Key Points
Solana is still the fastest-growing developer-oriented blockchain.
But it needs to overcome macro, competitive, and regulatory challenges.
Solana (CRYPTO: SOL) reached an all-time high of $294.85 on Jan. 18, 2025. Today, it trades at about $90. Should investors buy the token while it's still trading below $100?
Solana's core strengths
Solana is a proof-of-stake (PoS) blockchain like Ethereum (CRYPTO: ETH). That means Solana's tokens can't be mined like Bitcoin (CRYPTO: BTC), but they can be staked (locked up on the blockchain to earn interest-like rewards) and used in smart contracts (which are used to develop decentralized apps and tokenize real-world assets).
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Solana can process transactions much faster than Ethereum because it timestamps transactions before they're validated with its proprietary proof-of-history (PoS) mechanism. Solana's Layer 1 (L1) blockchain processes 1,000 to 3,700 transactions per second (TPS), while Ethereum's L1 blockchain only processes 15 to 30 TPS.
Solana's superior speed drew many developers to its ecosystem, and it's now the second-largest developer-oriented blockchain after Ethereum. Big financial companies -- including Circle, Visa, PayPal, and Stripe -- have also been using Solana's blockchain to settle stablecoin transfers, tokenize real-world assets, launch new cryptocurrencies, and accelerate their own transactions.
The larger Solana's ecosystem grows, the more developers will use its token to pay their transaction fees and boost Solana's value. Its first spot-price ETFs, launched in the U.S. and Canada last year, could also attract more institutional investors.
But is it the right time to buy Solana?
Solana has a brighter future than many other altcoins, but it still faces macro, competitive, and regulatory headwinds. On the macro front, elevated interest rates and Treasury yields will continue to pull investors away from cryptocurrencies and riskier investments.
As for the competition, Solana needs to stay ahead of Ethereum's Layer 2 (L2) solutions -- which bundle together transactions and process them off-chain at higher speeds -- as well as structural competitors like Cardano and Polkadot.
Lastly, the Democratic takeover of the House and Senate during the midterms could end the Trump Administration's crypto-friendly policies. It could also delay the establishment of a clear regulatory framework for the crypto market. The CLARITY Act, which was struck down in a Senate vote earlier this year, was originally designed to address those concerns.
While Bitcoin and Ether might still rise over the next year as investors nibble on cryptocurrencies again, smaller tokens like Solana could face more challenging uphill battles. Therefore, I'd stay away from Solana today -- even as it trades below $100 -- because I'm not sure if the current challenges will extend the current crypto winter.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, PayPal, Solana, and Visa. The Motley Fool recommends the following options: short December 2026 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.